J. Craig Venter, a Rockville-based pioneer in the field of gene discovery, and one of the largest makers of genetic analysis equipment will launch a new company to try to decode the entire human genome in three years, then package and sell the database to drug companies and others seeking to develop new drugs, tests and other medical treatments.
The as-yet unnamed company will be headed up by Venter, who will serve as president, and be headquartered in Rockville.
Venter and executives at Perkin-Elmer Corp. of Norwalk, Conn., predicted yesterday that the new company's work would transform molecular medicine and lead to dramatic advances in drug development.
Perkin-Elmer executives even went so far as to predict that the new venture's discoveries would one day lead to drugs being tailored specifically for individuals.
Industry analysts cautioned that about a dozen established genomics companies are already working with pharmaceutical and biotechnology companies to exploit genetic information to develop treatments that address the causes, rather than symptoms, of disease. Among them: Human Genome Sciences Inc. and Gene Logic Inc., both also based in Rockville.
But industry experts added that the Venter/Perkin-Elmer alliance could prove dynamic. And big drug companies have been willing to ante up large sums of cash for access to potentially valuable genetic information.
"This will surely have a significant impact on the rest of the industry. It's not every day a gorilla is born," said Elizabeth Silverman, a genomics industry analyst for BancAmerica Robertson Stephens in New York.
"All of the ingredients are here for success," said Robert J. Olan, an analyst at Hambrecht & Quist Group in New York who follows Perkin-Elmer. "Investors have been looking for this company to move in this direction for a long time and now they are, in a big way."
Shares of Perkin-Elmer, which netted $115 million on $1.2 billion in revenue last year, rose $4.25 to $72.75 yesterday.
Tony White, Perkin-Elmer's chairman and chief executive officer, said his company would hold an 80 percent stake in the new venture; Venter and others would hold a 20 percent stake. He said specific financial terms of the agreement have not been finalized.
White said it is still too early to tell how much the new company will cost to launch.
Industry analysts estimated that starting a genomics company that has the focus outlined by White and Venter will be enormously expensive; some estimate the cost as high as $150 million.
They also cautioned that it could take years to develop software programs to store and translate genetic data and that it's a long and winding road from deciphering a gene sequence to determining whether it has value as a lead for drug or diagnostic development.
Olan at Hambrecht & Quist Group said the new Maryland-based venture holds two key strengths.
The first is Perkin-Elmer's leading position as a manufacturer of the machines that can rapidly search through DNA for the sequence of chemical molecules in genes. Most genetic research operations in academia and industry use Perkin-Elmer's machines, called high-throughput sequencers.
Secondly, the life sciences equipment company has found in Venter a highly respected ally in the field of genetics research.
Venter, known as the father of gene sequencing, developed the method now commonly used for finding gene codes while a researcher at the National Institutes of Health in the 1980s.
Venter said that as part of the deal he will resign from the Institute for Genomics Research (TIGR), a nonprofit group he founded in 1992.
Last June, TIGR severed its sometimes awkward relationship with Human Genome Sciences, the publicly held Rockville genomics company founded to commercialize TIGR's discoveries, which had committed $85 million in funding for its research.
Yesterday, Venter said he thought the formation of the new company would prove a "paradigm shift" in the usefulness of gene sequencing as a drug development tool.
Michael W. Hunkapiller, vice president of Perkin-Elmer's Applied Biosystems Division, said the new company would make the human gene sequence codes it cracks publicly available because it sees opportunity in the ensuing research that would result.
For one, the new company expects to make money by packaging DNA databases and information on software programs and in other forms that drug companies and others would find useful in their efforts to seek genetic targets for new drug development.
"There are all kinds of public databases of information available, yet there are lots of successful companies that learn how to create value with that information by deciphering it and packaging it for others," said Hunkapiller, who will serve as vice president for the new company.
The company also expects to be able to develop or help develop a new array of diagnostic tests to determine who has genes related to specific diseases or disorders.
A key element in the venture with Venter, Hunkapiller said, will be an effort to collect a database of variations in human DNA, called polymorphisms.
It is these variations that make each person unique, and which could provide drug researchers in time with a host of clues for a variety of projects, from developing new drugs to predicting how specific patients might react to experimental drugs being used in clinical trials, said Hunkapiller.
Silverman said the effect of the Venter/Perkin-Elmer venture won't be seen for perhaps a year or more as it's not expected to be fully operational until the spring of 1999.
Pub Date: 5/12/98